CPEC is part of Chinese BRI that is folding to be huge socio-economic exercises that may ultimately create an impact not only in the region but may well expand into the western world. The basic concept governing BRI is connectivity that is valued highly in the current world. All developed countries wish to achieve high levels of connectivity and would take advantage of the vast potential of markets in the region and its periphery particularly the former Soviet world that still is not fully explored and exists in isolation.
BRI advocated connectivity as lifeline to business activities because businesses unite and evolve within geographical clusters and these businesses are both inter-industry and intra-industry in nature. Such geographical clusters can be local, regional, national and international, and with connectivity, could expand exponentially. The wide ranging nexus of such businesses is portrayed by the inception of worldwide web translated into social media revolution through digital applications like Facebook, Google and retail brands like Amazon that all started in the famed Silicon valley, California.
The physical connectivity has the potential of building up on such businesses in far-flung corners of the world. It may be mentioned that Amazon is still not able to operate in Pakistan because of lack of physical connectivity thereby denying Pakistanis the advantage inherent in it. This deficiency will be removed once CPEC and BRI are able to connect geographical clusters into a united whole. BRI is actually the physical aspect of cyber world and it promises to exploit the advantages if it is pursued innovatively.
Despite cyber initiative international cluster development that took place in different geographical locations was tied up with efficiency in international trading agreements as was in the case of trade worth billions of dollars between China and the US. Due to this process China became an integral part of international technology cluster through integrating its commercial stakes with the US by becoming an integral part of the value chain of US businesses. It took nearly two decades of cluster formation and development between America that raised China up as the second largest economy in the world.
Chinese leadership was acutely aware of the unbridled reach of the cyber world and conceived giving it physical connectivity. It is a bold idea for which the western world was not prepared and feared it to be impinging its technological superiority. The idea will provide physical access to almost all markets BRI connects with and will boost business of all geographical clusters. The prime derivative of BRI is CPEC that aims at overhauling the old Pakistani infrastructure and bringing it at par with modern economies so that it realises its true economic potential. Once CPEC is up and running it will give Pakistan access to Chinese markets in the same way Vietnam has been benefitting from becoming part of the Chinese value chain.
CPEC will bring connectivity to Pakistan but innovation in Pakistan’s industrial sector would come through Special Economic Zones (SEZ). These zones will bring to fore regional and local geographical clusters into the overall fold thereby increasing business manifold. Pakistani government required to bring Pakistani business sector into these zones as currently it is primarily engaged in servicing small network of large urban markets. Pakistan can provide incentives to business groups to encourage small engineering and software companies to locate into SEZ’s and join the larger connectivity network.
Pakistani businesses possess good deal of expertise in small-scale chip manufacturing and once located in SEZ’s it can become part of Chinese mobile phone development industry while also developing an indigenous base for high technology manufacturing industries. In the same vein light and medium scale industries could operate from SEZ’s particularly the very profitable sports goods industry. Pakistani businesses can also organise medical instruments units in SEZs as this sector has also proven quite successful economically.
Pakistan should realise that its niche lies in agricultural sector as it cannot compete with high-level Chinese technological industries. China has already shown this way to Pakistan which they realise could be developed as the large cultivable land-mass of Pakistan is under utilised. China would become the primary market for Pakistani produce as it needs to feed its growing population as under demographic pressure it is on the verge of approving two-child policy instead of the current one-child policy.
Livestock is another area that could be developed under CPEC and may become regular export item to China. Pakistan has proved wonderful breeding ground for chicken that has now replaced beef and mutton. Its continental shelf is brimming with seafood that is not highly consumed in Pakistan and could well be processed in SEZs and exported to China. Pakistan needs to urgently prepare a blueprint aimed at promoting local businesses run by indigenous skills particularly finished textile products.
Raja Nazeem-ul-Amin is Minister/Vice Chairman Board of Investment Gilgit-Baltistan